Correlation Between Mesabi Trust and PetroChina
Can any of the company-specific risk be diversified away by investing in both Mesabi Trust and PetroChina at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mesabi Trust and PetroChina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesabi Trust and PetroChina Co Ltd, you can compare the effects of market volatilities on Mesabi Trust and PetroChina and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mesabi Trust with a short position of PetroChina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesabi Trust and PetroChina.
Diversification Opportunities for Mesabi Trust and PetroChina
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesabi and PetroChina is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and PetroChina Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroChina and Mesabi Trust is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mesabi Trust are associated (or correlated) with PetroChina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroChina has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and PetroChina go up and down completely randomly.
Pair Corralation between Mesabi Trust and PetroChina
Considering the 90-day investment horizon Mesabi Trust is expected to generate 0.88 times more return on investment than PetroChina. However, Mesabi Trust is 1.13 times less risky than PetroChina. It trades about 0.28 of its potential returns per unit of risk. PetroChina Co Ltd is currently generating about -0.12 per unit of risk. If you would invest 2,423 in Mesabi Trust on August 30, 2024 and sell it today you would earn a total of 330.00 from holding Mesabi Trust or generate 13.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesabi Trust vs. PetroChina Co Ltd
Performance |
| Timeline |
| Mesabi Trust |
| PetroChina |
Mesabi Trust and PetroChina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesabi Trust and PetroChina
The main advantage of trading using opposite Mesabi Trust and PetroChina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesabi Trust position performs unexpectedly, PetroChina can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PetroChina will offset losses from the drop in PetroChina's long position.| Mesabi Trust vs. Franco Nevada | Mesabi Trust vs. Osisko Gold Ro | Mesabi Trust vs. Sandstorm Gold Ltd | Mesabi Trust vs. Royal Gold |
| PetroChina vs. Equinor ASA | PetroChina vs. Origin Energy Ltd | PetroChina vs. Shell PLC | PetroChina vs. Eni SpA ADR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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